Correlation Between Pacific Basin and Mitsui OSK
Can any of the company-specific risk be diversified away by investing in both Pacific Basin and Mitsui OSK at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Pacific Basin and Mitsui OSK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Basin Shipping and Mitsui OSK Lines, you can compare the effects of market volatilities on Pacific Basin and Mitsui OSK and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Pacific Basin with a short position of Mitsui OSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Basin and Mitsui OSK.
Diversification Opportunities for Pacific Basin and Mitsui OSK
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pacific and Mitsui is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and Mitsui OSK Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitsui OSK Lines and Pacific Basin is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Pacific Basin Shipping are associated (or correlated) with Mitsui OSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitsui OSK Lines has no effect on the direction of Pacific Basin i.e., Pacific Basin and Mitsui OSK go up and down completely randomly.
Pair Corralation between Pacific Basin and Mitsui OSK
Assuming the 90 days horizon Pacific Basin Shipping is expected to generate 1.2 times more return on investment than Mitsui OSK. However, Pacific Basin is 1.2 times more volatile than Mitsui OSK Lines. It trades about -0.01 of its potential returns per unit of risk. Mitsui OSK Lines is currently generating about -0.1 per unit of risk. If you would invest 420.00 in Pacific Basin Shipping on November 2, 2024 and sell it today you would lose (4.00) from holding Pacific Basin Shipping or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Basin Shipping vs. Mitsui OSK Lines
Performance |
| Timeline |
| Pacific Basin Shipping |
| Mitsui OSK Lines |
Pacific Basin and Mitsui OSK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Basin and Mitsui OSK
The main advantage of trading using opposite Pacific Basin and Mitsui OSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Basin position performs unexpectedly, Mitsui OSK can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mitsui OSK will offset losses from the drop in Mitsui OSK's long position.| Pacific Basin vs. Kawasaki Kisen Kaisha | Pacific Basin vs. Hapag Lloyd Aktiengesellschaft | Pacific Basin vs. Hapag Lloyd Aktiengesellschaft | Pacific Basin vs. SITC International Holdings |
| Mitsui OSK vs. SITC International Holdings | Mitsui OSK vs. Orient Overseas Limited | Mitsui OSK vs. Western Bulk Chartering | Mitsui OSK vs. Hapag Lloyd Aktiengesellschaft |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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